Series 22: ICSI IIP- IBC Knowledge Capsule
IBC KNOWLEDGE CAPSULE 22
Framework for “Information Memorandum under IBC”
Introduction:
‘Information Memorandum’ (hereinafter referred as ‘IM’) is the most important document under Corporate Insolvency
Resolution Process which provides basis for preparing the resolution plan and consists of information of corporate debtor
inter-alia including list of creditors and the amount of claims admitted, debt due from related parties, number of workers and
employees and liabilities due to them, details of material litigation, latest audited financial statements and audited financial
statements for the last two years, provisional financial statements upto a date which is not earlier than fourteen days from the
date of application, liquidation value etc.
During the Corporate Insolvency Resolution Process, when a Resolution Professional is appointed, he has to perform various
duties as per Section 29 of the Code including the preparation of Information Memorandum. IM is a document prepared by
Resolution Professional which provides details of corporate debtor to assist Resolution Applicant to formulate resolution plan.
The available legal framework of Information Memorandum with important provisions under the Code and under relevant
regulations are summarized in the table below:
The table has been color coded as follows: Provisions of the Code
Rules/Regulations under the
Code
Orders passed by
NCLT/NCLAT/Supreme Court
Circulars/Notifications/Reports
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TABLE: “Information Memorandum” under IBC
Source Details /Excerpts Explanation
Section 5 (10) of the Code: “information memorandum” means a memorandum prepared IM is defined in the Code.
Definition of Information by resolution professional under sub-section (1) of section 29;
Memorandum
Section 25(2)(g) of the Code:
(2) the resolution professional shall undertake the following Section 25 of the Code defines the
Duties of Resolution
actions, namely: duties of the Resolution Professional
Professional … and states inter-alia that it is the duty of
(g) prepare the information memorandum in accordance RP to prepare the IM.
with section 29;
Section 29 of the Code: (1) The resolution professional shall prepare an information This section details the preparation of
Preparation of Information memorandum in such form and manner containing such Information Memorandum by
Memorandum relevant information as may be specified by the Board Resolution Professional to provide the
for formulating a resolution plan. same to Resolution applicant on receipt
of undertaking from resolution
(2) The resolution professional shall provide to the applicant.
resolution applicant access to all relevant information in
physical and electronic form, provided such resolution
applicant undertakes- (a) to comply with provisions of
law for the time being in force relating to confidentiality
and insider trading; (b) to protect any intellectual
property of the corporate debtor it may have access to;
and (c) not to share relevant information with third
parties unless clauses (a) and (b) of this sub-section are
complied with.
Explanation. – For the purposes of this section, “relevant
information” means the information required by the
resolution applicant to make the resolution plan for the
corporate debtor, which shall include the financial position of
the corporate debtor, all information related to disputes by
or against the corporate debtor and any other matter
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pertaining to the corporate debtor as may be specified.
Section 30 of the Code: (1) A resolution applicant may submit a resolution plan The purpose of an Information
Submission of Resolution [along with an affidavit stating that he is eligible under Memorandum is that resolution plan
Plan section 29A] to the resolution professional prepared on the may be prepared based on it. It is
basis of the information memorandum. specified in the provision relating to
preparation of Resolution Plan.
Section 33 of the Code: Explanation. – For the purpose of this sub-section, it is hereby As per the explanation of Section 33(2), it
Initiation of liquidation declared that the committee of creditors may take the is declared that the committee of creditors
decision to liquidate the corporate debtor, any time after its may take the decision to liquidate the
constitution under sub-section (1) of section 21 and before corporate debtor, any time after its
the confirmation of the resolution plan, including at any time
constitution under sub-section (1) of
before the preparation of the information memorandum.
Section 21 and before the confirmation of
the resolution plan, including at any time
before the preparation of the information
memorandum.
Section 240 of the Code: (1) The Board may, by notification, make regulations As per Section 240(2)(u), IBBI may make
Power to make regulations consistent with this Code and the rules made thereunder, to regulation for prescribing the form and the
carry out the provisions of this Code. manner in which an information
(2) In particular, and without prejudice to the generality of memorandum shall be prepared by
the foregoing power, such regulations may provide for all or
Resolution Professional under section
any of the following matters, namely:
….. 29(1).
(u) the form and the manner in which an information
memorandum shall be prepared by the resolution
professional sub-section (1) of section 29;
Regulation 36 of the IBBI (1) Subject to sub-regulation (4), the resolution professional This Regulation specifies the details
(CIRP) Regulations, 2016: shall submit the information memorandum in electronic form that need to be set out in the IM.
Information Memorandum to each member of the committee within two weeks of his
appointment, but not later than fifty-fourth day from the Key features:
insolvency commencement date, whichever is earlier. The resolution professional shall
(2) The information memorandum shall contain the following submit the information
details of the corporate debtor- memorandum in electronic form
(a) assets and liabilities with such description, as on the to each member of the
insolvency commencement date, as are generally necessary committee within two weeks of
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for ascertaining their values. Explanation: ‘Description’ his appointment, but not later
includes the details such as date of acquisition, cost of than fifty-fourth day from the
acquisition, remaining useful life, identification number, insolvency commencement
depreciation charged, book value, and any other relevant date, whichever is earlier.
details. The resolution professional shall
(b) the latest annual financial statements; share the information
(c) audited financial statements of the corporate debtor for memorandum after receiving an
the last two financial years and provisional financial undertaking from a member of
statements for the current financial year made up to a date the committee to the effect that
not earlier than fourteen days from the date of the such member or resolution
application; applicant shall maintain
(d) a list of creditors containing the names of creditors, the confidentiality of
amounts claimed by them, the amount of their claims the information and shall not
admitted and the security interest, if any, in respect of such use such information to cause an
claims; undue gain or undue loss to
(e) particulars of a debt due from or to the corporate debtor itself or any other person and
with respect to related parties; comply with the requirements
(f) details of guarantees that have been given in relation to under sub-section (2) of section
the debts of the corporate debtor by other persons, specifying 29.
which of the guarantors is a related party; (Sample Confidentiality Undertaking
(g) the names and addresses of the members or partners annexed as Annexure A)
holding at least one per cent stake in the corporate debtor
along with the size of stake; The details of Corporate Debtor
(h) details of all material litigation and an ongoing that need to be mentioned are
investigation or proceeding initiated by Government and also given in this provision.
statutory authorities; (Sample particulars that need to be
(i) the number of workers and employees and liabilities of the covered in an IM are given as Annexure
corporate debtor towards them; B)
(l) other information, which the resolution professional deems
relevant to the committee.
(3) A member of the committee may request the resolution
professional for further information of the nature
described in this Regulation and the resolution
professional shall provide such information to all
members within reasonable time if such information has
a bearing on the resolution plan.
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(4) The resolution professional shall share the information
memorandum after receiving an undertaking from a member
of the committee to the effect that such member or resolution
applicant shall maintain confidentiality of the information
and shall not use such information to cause an undue gain or
undue loss to itself or any other person and comply with the
requirements under sub-section (2) of section 29.
IBBI Press Release No. A draft specimen was presented by IBBI for what all an https://ibbi.gov.in/webadmin/pdf/pre
IBBI/PR/2018/33 Information Memorandum should entail. ss/2018/Nov/PR-Specimen-
compressed.pdf
The Report of the “The information collected on the entity is used to compile an Link for full report:
Bankruptcy Law Reforms information memorandum, which is signed off by the debtor https://ibbi.gov.in/BLRCReportVol1_0411201
Committee (BLRC) and the creditors committee, based on which solutions can be 5.pdf
(November 2015) offered to resolve the insolvency. In order for the market to
provide solutions to keep the entity as a going concern, the
information memorandum must be made available to
potential financiers within a reasonable period of time from
her appointment to the IRP. If the information is not
comprehensive, the RP must put out the information
memorandum with a degree of completeness of the
information that she is willing to certify. For example, as part
of the information memorandum, the RP must clearly state
the expected shortfall in the coverage of the liabilities and
assets of the entity presented in the information
memorandum. Here, the asset and liabilities include those
that the RP can ascertain and verify from the accounts of the
entity, the records in the information system, the liabilities
submitted at the start of the IRP, or any other source as may
be specified by the Regulator”
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Annexure A: Sample Confidentiality Undertaking for an Information Memorandum
(On The Letterhead of the Financial Creditor/Resolution Applicant)
CONFIDENTIALITY UNDERTAKING
This confidentiality undertaking has been signed by __________________________, a Financial Creditor, having its office at
______________________________________________________________ acting through Mr./Ms. ______________________________________, the
authorized signatory / authorized representative (which expression shall, unless repugnant to the context, include its
successors in business, administrators in business, administrators, insolvency professional, liquidator and assigns or legal
representative) on ______day of ________, 2018 and submitted to Mr. __________, an Insolvency Professional having Registration No.
________________________.
WHEREAS M/s. ____________________, a company registered under Companies, Act, 1956 (thereafter referred as (Corporate
Debtor) is under Corporate Insolvency Resolution Process pursuant to Hon’ble NCLT (Mumbai Bench) order dated 19th June
2018 and subsequently, Mr. ___________ having Registration No. ________________________ has been appointed as a Resolution
Professional (RP) by the Committee of Creditors.
WHEREAS RP has prepared Information Memorandum as per Section 29(1) of the Insolvency and Bankruptcy Code, 2016 and
Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016.
WHEREAS RP is required to share the Information Memorandum after receiving an undertaking from the member of the
committee of creditors to the effect that such member shall maintain confidentiality of the information and shall not use such
information to cause any undue gain or undue loss to itself or any other person and comply with the requirements under
Section 29(2) of the Insolvency and Bankruptcy Code, 2016 as defined under Regulation 36(4) of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
THEREFORE, the Financial Creditor/Resolution Applicant hereby declares and undertakes as follows:
WE HEREBY DECLARE AND UNDERTAKE that we will not divulge any part of the information contained in the Information
Memorandum of Corporate Debtor, prepared as per Section 29 (1) of the Insolvency and Bankruptcy Code, 2016 and
Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016, through oral or written communication or through any mode, to anyone.
WE FURTHER UNDERTAKE AND DECLARE that we shall comply with provisions of law for the time being in force relating to
confidentiality and insider trading; and shall protect any intellectual property of the Corporate Debtor which we may have
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access to. We shall take all necessary steps to safeguard the privacy and confidentiality and shall use our best endeavours to
secure that no person acting on our behalf or ourselves divulge or disclose or use any part of the relevant information which
shall include the financial position of the Corporate Debtor, all information related to disputes by or against the Corporate
Debtor and any other matter pertaining to the Corporate Debtor as may be specified in compliance with the provisions of the
Insolvency and Bankruptcy Code, 2016.
PROVIDED THAT nothing contained in this Confidentiality Undertaking shall apply to any disclosure: (i) required by us by the
order of a court of competent jurisdiction or an appropriate regulatory, statutory or judicial authority; (ii) of any information
which is in the public domain otherwise than as a result of a breach of this Confidentiality Undertaking, or (iii) by us to our
legal and other professional advisors.
Signed on behalf of
M/s _________________________________
by ____________________
(Name and Designation)
Authorised Signatory
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Annexure B: Sample list of Particulars that is required in an Information Memorandum
About the Corporate Debtor
About the Promoters & Board of Directors
Shareholding Pattern
Assets and liabilities Statement as on ............... (insolvency commencement date)
Latest annual financial statements
Audited financial statements of the Corporate Debtor for the last two financial years & provisional financial statements
for the current financial year made up to ................... (date not earlier than fourteen days from the date of application)
List of creditors
Particulars of debt due from or due to corporate debtor with respect to related parties
Details of guarantees that have been given in relation to debts of the corporate debtor by other persons
Names and addresses of members or partners J holding at least one per cent stake in the corporate debtor
Details of all material litigations and ongoing investigations or proceedings initiated by Government and statutory
authorities
Details of number of workers and employees and liabilities of the corporate debtor towards them
Copy of the Order passed by National Company Law Tribunal (NCLT) admitting the application of the Corporate Debtor
Any other information relevant to the Committee of Creditors
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Notes:
Abbreviations used:
IBBI: Insolvency and Bankruptcy Board of India
IPA: Insolvency Professional Agency
ICSI IIP: ICSI Institute of Insolvency Professionals
IP: Insolvency Professional
CIRP: Corporate insolvency resolution process
IRP: Interim Resolution Professional
AR: Authorised Representative
COC: Committee of Creditors
CD: Corporate Debtor
FC: Financial Creditor
OC: Operational Creditor
Code: Insolvency and Bankruptcy Code, 2016
Disclaimer: Due care has been taken to avoid errors or omissions. In spite of this errors may still persist. ICSI IIP shall not
be responsible for any loss or damage resulting from any action taken on the basis of this document. To avoid any doubtit
is suggested that the reader should cross check the contents with original Government notifications.
